Abitibi, Golden Rule settle Douay project

Calgary-based Northern Abitibi Mining (ASE) and Golden Rule Resources (TSE) have settled their legal dispute with partners Inco (TSE), Vior (ME) and Cambior (TSE). The legal dispute erupted between the companies last February after Inco and its partners reported a gold discovery on their Douay Twp., property in northwestern Quebec. Northern Abitibi and Golden Rule own property adjacent to that discovery. The lawsuit concerned a proposed option arrangement between the two Calgary-based juniors and Inco.

Under terms of the recent settlement, Northern Abitibi has purchased Golden Rule’s 50% interest in the Douay/Desmazures property for $251,775 comprising 719,358 shares of Northern Abitibi.

As a result, Golden Rule now owns 5,969,529 shares or about 75% of Northern Abitibi’s 7,935,742 issued shares. Northern Abitibi now owns 100% of the 152 claims comprising the Douay/Desmazures project.

A revised option agreement with Inco and Vior allows the latter companies to earn a 50% interest in 78 claims owned by Northern Abitibi by spending $1.5 million over four years. Of that amount, $250,000 must be spent in each of the first two years, followed by $500,000 in each of the remaining two years. Northern Abitibi will also have the right to acquire a 50% interest in four claims — owned by Inco, Vior and Cambior — which lie inside the 78-claim group.

Cambior will receive a 1% net smelter royalty from all 82 claims in exchange for its current participating interest in the four internal claims.

At feasibility, Inco and Vior will have an option to purchase an additional 10% interest from Northern Abitibi. If exercised, the ownership interests would then become 40% for Northern Abitibi and 60% for Inco and Vior. The purchase price will be 125% of 10% of the total expenditures incurred up to feasibility.

As part of the option with Inco and Vior, the latter companies will also collectively purchase an additional 104,166 shares of Northern Abitibi at prices between 50 cents and $2.

Last spring, Northern Abitibi conducted line cutting and geophysical surveys in the area adjacent to the Inco-Vior-Cambior West zone which hosts preliminary reserves of 585,000 tons grading 0.3 oz. gold per ton. The geophysical survey indicates that the favorable geology can be traced on strike from the West zone for about 3,000 ft. on to Northern Abitibi’s claims. It is anticipated that exploration will get under way soon under the management of Inco.